Two companies sell 7 lakh shares to repay bank loans

Two listed companies—Paper Processing and Packaging Ltd and Bangladesh Monospool Paper Manufacturing Company Ltd—have sold more than seven lakh shares in less than a month to repay their several bank loans.

Bangladesh Monospool Paper Manufacturing has long–term loans of Tk 42.91 core and short–term loans of Tk 30.76 crore.

Meanwhile, Paper Processing and Packaging has long–term loans of Tk 7.78 crore and short–term loans of Tk 19.64 crore.

The sponsor and director who have sold these shares are required to lend the money to their parent companies, which is to be used to repay the bank loans; in exchange, they will receive interest.

These two are among 41 companies that shifted away from the OTC market after the Bangladesh Securities and Exchange Commission abolished the OTC platform last year, aiming to improve the financial health of the companies.

Paper Processing and Packaging Ltd is owned by Magura Group, which holds 9,21,306 shares, or 8.2 per cent, of the company’s stock.

The company sold a total of 4 lakh shares between June 23 and July 3.

Meanwhile, Bangladesh Monospool Paper Manufacturing is where the Magura Group has a nominated director and another company from the same group, Pearl Paper and Board Mills Ltd, has a nominated sponsor.

Between June 13 and July 13, Pearl Paper and Board Mills Limited sold 2,18,526 or 2.33 per cent of the shares of Bangladesh Monospol Paper Company.

The two publicly traded companies, Monospool Paper and Paper Processing, are led by Magura Group Chairman Mustafa Kamal Mohiuddin.

On June 8, the chairman sold 1,00,980 shares of the Paper Processing and Packaging company, and on June 13, he sold 18,684 shares of Bangladesh Monospool Paper.

Mustafizur Rahman, who is the secretary of the two companies, told Business Post that the shares were sold subject to BSE’s approval. Rezaul Karim, executive director and spokesperson of BSEC, said the company has shifted away from the OTC market and started production in the main market.

The closed company needs cash to start, but they have several bank loans, he added.

“The director and sponsor who have sold the shares will lend the money to the companies and it will be used to repay the bank loans. They will receive interest on these loans from the company,” he also added.

Monospool Paper’s earnings per share (EPS) reached Tk 3.04 in the third quarter (Q3) of FY22, a significant increase of 1,500 per cent from Tk 0.19 a year earlier.

Paper Processing and Packaging reported EPS of Tk 0.61, slightly up from Tk 0.40 during the period.

In the meantime, the sale of such a large number of shares has negatively impacted the share prices of the two companies.

Last month, the share price of the paper processing company decreased by 9 per cent, from Tk 190.2 to Tk 172.30.

Simultaneously, the share price of Monospool Paper Company fell by 12 per cent, from Tk 180.9 to Tk 158.70.